| QE: Not really. The problem with QE is that it's a purely monetary operation, so the only way it could lead to real economic growth is if it somehow lead to more lending. But arguably debt leads to instability, and besides it's like pushing on a string: it doesn't work when people don't want to borrow. It'd be better for the government to outright buy stuff or give people money. Depressing economic output: Absent inflation, economic output is proportional to overall spending, so a policy like this can't depress economic output almost by definition. However, I'd say there is a risk of directing that output towards useless things, plus there's the risk of favouritism that leads to hidden inflation via inefficiency (see also: military industrial complex). So it matters where the money is spent. Personally, I'd like to try something like a "citizen's dividend": just hand out money to all citizens equally each month (or permanent residents, you can argue the details), no questions asked and no strings attached, but vary the amount based on current inflation. That is, increase the dividend when inflation is low, scale it back when inflation rises above some target. So kind of like a UBI, but with a macroeconomic motivation rather than trying to replace the welfare system. It also appeals to me because it's a sort of direct democratic approach to macroeconomic management: people can literally vote with their wallet about how the money is spent. Where to read more: modern monetary theory is a good keyword to start with. I found Randall Wray's book very interesting. Warren Mosler's "7 deadly innocent frauds" is less academic, but it's available online and interesting since it comes from a practitioner instead of a theoretician. Though I admit it's been many years since I read either. |